Laos Manufacturing Company has four operating divisions. During the first quarter of 2016, the company reported total income from operations of $36,000 and the following results for the divisions:

Analysis reveals the following percentages of variable costs in each division.

Closing any division would save 70% of the fixed costs and expenses for that division. Top management are deeply concerned about the unprofitable divisions (Kelowna and Moncton). The consensus is that one or both of them should be eliminated.
Instructions
(a) Calculate the contribution margin for the two unprofitable divisions.
(b) Prepare an incremental analysis for the possible elimination of (1) the Kelowna division and (2) the Moncton division. What course of action do you recommend for each division?
(c) Prepare a condensed income statement in columns using the CVP format for Laos Manufacturing Company, assuming
(1) The Kelowna division is eliminated,
(2) The unavoidable fixed costs and expenses of the Kelowna division are allocated 30% to Brandon, 50% to Sherbrooke, and 20% to Moncton.
(d) Compare the total income from operations with the Kelowna division ($36,000) versus total income from operations without this division.

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Division Brandon Sherbrooke Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations Kelowna $405,000 400,000 100,000 $730,000 480,000 207,000 $(95,000) 43,000 98,000 Moncton $500,000 390,000 120,000 S(10,000) 576,000 246,000 Kelowna Brandon Sherbrooke Moncton Cost of goods sold Selling and administrative expe 90% 60 80% 60 90% 70 95% 80 nses